- U.S. Steel (NYSE:X) is upgraded to Neutral from Sell at UBS as a selloff since the Q1 peak has created valuation with limited downside, but the firm cuts its stock price target to a Street-low $22 from $28; shares +0.4% pre-market.
- UBS analyst Andreas Bokkenheuser expects hot-rolled coil steel prices to fall to $660/ton from $760, and says U.S. Steel shares are now pricing in an implied steel price of ~$630/ton.
- Bokkenheuser notes X shares trade at 2.9x 2019 estimated Wall Street EBITDA vs. a 5.2X historical average, but he remains cautious on the steel sector, adding that if new U.S. trade deals include tariff repeals, steel prices could see further downside.
- The firm continues to prefer electric arc furnace producers Nucor (NYSE:NUE) and Steel Dynamics (NASDAQ:STLD) over basic oxygen furnaces producers X and AK Steel (NYSE:AKS).
- Now read: Steel Dynamics Getting No Love Despite Excellent Margins And Cash Flow
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